OpenAI’s Windsurf deal is off, and Windsurf’s CEO is going to Google

Nice plan I guess. Kind of obvious to spot though.

> Mohan and the Windsurf employees will focus on agentic coding efforts at Google DeepMind and work largely on Gemini. Google will not have any control over nor a stake in Windsurf, but it will take a non-exclusive license to some of Windsurf’s technology.

Sounds to me like they're "hiring" them like one "hires" a consultant?

I wonder what happened with the OpenAI deal. Anyone have any guesses? My first guess is "Look at Claude Code, we can do this ourselves." But, I am likely thinking too simply.

edit: does this mean that Windsurf and its users will stop being iced-out by Anthropic? Or, is this the end of Windsurf?

What a harsh time to work for an AI startup as a rank and file employee! I wonder how the founders justify going along with it inside their mind.

[0] Character.ai CEO Noam Shazeer Returns to Google https://news.ycombinator.com/item?id=41141112 - 11 months ago (87 comments)

Edit: Thank you @jonny_eh for the clarification. I can't imagine it feels awesome being a leftover but at least you vested out. "Take the money and leave" is still a bit raw when the founders and researchers are now getting the initial payout + generous Google RSU's.

Hopefully Windsurf employees are treated well here.

Note: I worked at Character until recently.

Edit: the people downvoting this clearly can't read, I made the exact same point as jonny_eh.

Let's review the current state of things:

- Terminal CLI agents are several orders of magnitude less $$$ to develop than forking an entire IDE.

- CC is dead simple to onboard (use whatever IDE you're using now, with a simple extension for some UX improvements).

- Anthropic is free to aggressively undercut their own API margins (and middlemen like Cursor) in exchange for more predictable subscription revenue + training data access.

What does Cursor/Windsurf offer over VS Code + CC?

- Tab completion model (Cursor's remaining moat)

- Some UI niceties like "add selection to chat", and etc.

Personally I think this is a harbinger of where things are going. Cursor was fastest to $900M ARR and IMO will be fastest back down again.

High interest rates make VC funding more expensive and now bigtech can swoop in, poach all the necessary staff and deprive investors of an exit.

What is the point any more?

The moat is paper thin.

GitHub has open sourced copilot.

The open source community is working hard on their own projects.

No doubt Cursor is moving fast to create amazing innovations, but if the competition only focuses on thin wrappers they are not worth the billion dollar valuations.

I love watching this space as it is moving extremely fast.

...which no one talks about anymore. Okay I guess you have a point.

[1] https://www.theverge.com/2024/8/2/24212348/google-hires-char...

I am genuinely curious if any Cursor or Windsurf users who have also tried Claude Code could speak to why they prefer the IDE-fork tools? I’ve only ever used Claude Code myself - what am I missing?

Don’t forget all the GPUs. Nvidia always gets its cut.

I think only way Cursor and other UX wrappers still win is if on device models or at least open source models catch up in the next 2 years. Then i can see a big push for UX if models are truly a commodity. But as long as claude is much better then yes they hold all the cards. (And don't have a bigger company to have a civil war with like openai)

Given the release of Claude Code, it was already over for them.

The bigger issue is the advantage Anthropic, Google and OpenAI have in developing and deploying their own models. It wasn't that long ago that Cursor was reading 50 lines of code at a time to save on token costs. Anthropic just came out and yolo'd the context window because they could afford to, and it blew everything else away.

Cursor could release a cli tomorrow but it wouldn't help them compete when Anthropic and Google can always be multiples cheaper

[0] https://cursor.com/blog/agent-web

if it was better it would have survived.

- > curl -fsSL http://claude.ai/install.sh | bash

- > claude

- > OAuth to your Anthropic account

Done. Now you have a SOTA agentic AI with pretty forgiving usage limits up and running immediately. This is why it's capturing developer mindshare. The simplicity of getting up and going with it is a selling point.

Occasionally they lose their connection to the terminal in VSCode, but I’ve got no other integration complaints.

And I really prefer the bring-your-own-key model as opposed to letting the IDE be my middleman.

I doubt MS has ever made $900M off of VS Code.

- AI is not good enough yet to abandon the traditional IDE experierence if you're doing anything non-trivial. Hard finding use cases for this right now.

- There's no moat here. There are already a dozen "Claude Code UI" OSS projects with similar basic functionality.

I haven't tried Claude Code VS Code extension. Did anyone replaced Cursor with this setup?

They're likely artificially holding it back either because its a loss leader they want to use a very specific way, or because they're planning the next big boom/launch (maybe with a new model to build hype?).

Since Claude Code is cli based, I reviewed my cli toolset: Migrated from iTerm2 to Ghostty and Tmux, from Cursor to NeoVim (my God is it good!).

Just had a 14h workday with this tooling. It’s so good that I complete the work of weeks and months within days! Absolutely beast.

At this point I am thinking IDEs do not reflect the changing reality of software development. They are designed for navigating project folders, writing / changing files. But I don’t review files that much anymore. I rather write prompts, watch Claude Code create a plan, implement it, even write meaningful commit messages.

Yes I can navigate the project with neovim, yes I can make commits in git and in lazygit, but my task is best spent in designing, planning, prompting, reviewing and testing.

What are the UX improvements?

I was using the Pycharm plugin and didn’t notice any actual integration.

I had problems with pycharm’s terminal—not least of which was default 5k line scroll back which while easy to change was worst part of CC for me at first.

I finally jumped to using iterm and then using pycharm separately to do code review, visual git workflows, some run config etc.

But the actual value of Pycharm—-and I’ve been a real booster of that IDE has shrank due to CC and moving out of the built in terminal is a threat to usage of the product for me.

If the plugin offered some big value I might stick with it but I’m not sure what they could even do.

I honestly don't know how great that is, because it just reiterates what I was planning anyways, and I can't tell if it's just glazing, or it's just drawing the same general conclusions. Seriously though, it does a decent job, and you can discuss / ruminate over approaches.

I assume you can do all the same things in an editor. I'm just comfortable with a shell is all, and as a hardcore Vi user, I don't really want to use Visual Studio.

Maybe there’s more to the story.

There are IDE integrations where you can run it in a terminal session while perusing the files through your IDE, but it's not powering any autocomplete there AFAIK.

Gentle reminder that more startups die by suicide than homicide, and that an early-stage startup is a total crapshoot.

Windsurf's value to OpenAI was for the latter to "see the whole chessboard" of context, which is helpful when you're training models to be good at coding.

But codex (and Claude Code) fulfill this from the CLI, and it's a first-party utility, not an acquisition.

AI growth has slowed to a crawl, and it's priced it self out vs cost of compute.

NVIDIA feels a lot like SUN.

> amazing documentary

Been there, done that: 2001, Startup Dot Com https://www.youtube.com/watch?v=cP4PGjnZwJE

Cursor's @Docs is still unparalleled and no MCP server for documentation fetching even comes close. That is the only reason why I still use Cursor, sometimes I have esoteric packages that must be used in my code and other IDEs will simply hallucinate due to not having such a robust docs feature, if any, which is useless to me, and I believe Claude Code also falls into that bucket.

Arguably they have the strongest product moat, and I wouldn’t be surprised if they beat OpenAI in a vertical coding model from that. Easy for them to have users generate evals and have model product feedback loop here.

It's quite interesting how little the Cursor power users use tab. Majority of the posts are some insane number of agent edits and close to (or exactly) 0 tabs.

While Zed's model is not as good the UI is so much better IMO.

Were I a Windsurf investor, I'd be pissed right now and calling my lawyer.

Source: I was in GDM when character was acquired.

Otherwise why not merge all of engineering into ElGoog?

Their base is $20/mth. That would equal 3.75M people paying a sub to Cursor.

If literally everyone is on their $200/mth plan, then that would be 375K paid users.

There’s 50M VS Code + VS users (May 2025). [1] 7% of all VS Code users having switched to Cursor does not match my personal circle of developers. 0.7% . . . Maybe? But, that would be if everyone using Cursor were paying $200/month.

Seems impossibly high, especially given the number of other AI subscription options as well.

[1] https://devblogs.microsoft.com/blog/celebrating-50-million-d...

Auto-regressive nature of these things mean that errors accumulate, and IDEs are well placed to give that observability to the human, than a coding agent. I can course correct more easily in an IDE with clear diffs, coding navigation, than following a terminal timeline.

You don't review the code? Just test it works?

Do you have a citation for this?

It might be at a loss, but I don’t think it is that extravagant.

Last disclosed revenue from Cursor was $500mil. https://www.bloomberg.com/news/articles/2025-06-05/anysphere...

CC has some integration with VSC it is not all or nothing.

However, while Cursor and GH Copilot improved, Windsurf went in the opposite direction. On each update, I started to get more and more issues. The agent often tried to run shell commands, and it hung up, or I found minor UI bugs. One day, I decided to give GH Copilot another chance, and I was surprised by how it evolved, to the point that it worked better than Windsurf for my usage. I don’t know what happened internally at Windsurf, but I notice the degradation as a user. If my case indicates what happened to other users, maybe OpenAI saw declining subscriptions and canceled the deal.

I don’t think this is true at all. The reason CC is so good is that they’re very deliberate about what goes in the context. CC often spends ages reading 5 LOC snippets, but afterwards it only has relevant stuff in context.

and yet you're pulling 14 hour workdays..

The libertarian spin on this would be government should have never scrutinized acquisitions and the result is just worse for everyone.

The progressive spin would be to now ban acquihires somehow, and then whatever new legal invention will be created next. I can imagine the next step being, creating a consulting company out of your startup and then selling yourself as consultants to big techs. Now you are neither acquired nor technically acqui-hired and the whackamole continues.

At some point, we need to realize the solution is the culture of people involved. If the government could just ask to reduce acquisitions to make the ecosystem more competitive and companies tried following it in spirit to the best of their ability, we might have much better results than whatever we have now. When culture degrades, the govt can’t trust companies, the companies can’t trust the govt, everything just gets worse, regardless of what rules you write and enforce.

I am on Max and I can work 5 hrs+ a day easily. It does fall back to Sonnet pretty fast, but I don't seem to notice any big differece.

This really is a whole new level of getting screwed.

So an extension will never be able to compete with Copilot.

agentic tool + anthropic subsidized pricing.

Second part is why it has "exploded"

I'm a rank and file dev at a non-big tech company and I got a call from a Windsurf sales rep this week who I had connected with on LinkedIn the day before (I never gave them my number). They told me my company was in talks with Windsurf about a licensing deal but that they would give me a 30 day trial of an enterprise account for use on personal projects to let me try it in advance. I guess the idea for them is to build enthusiasm among devs in the company?

Is this a standard sales strategy for products like this? It seems pretty aggressive to me but I'm just an engineer so I wouldn't know.

gemini cli is very expensive.

> - Tab completion model (Cursor's remaining moat)

What is that? I have Gemini Code Assist installed in VSCode and I'm getting tab completion. (yes, LLM based tab completion)

Which, as an aside I find useful when it works but also often extremely confusing to read. Like say in C++ I type

    int myVar = 123

    int myVar = 123;

and PS: that tiny example is not an example of a great tab completion. A better one is when I start editing 1 of 10 similar lines, I edit the first one, it sees the pattern and auto does the other 9. Can also do the "type a comment and it fills in the code" thing. Just trying to be clear I'm getting LLM tab completion and not using Cursor

Because they didn't do their jobs properly?

Trivial/easy stuff - let it make a PR at the end and review in GitHub. It rarely gets this stuff wrong IME or does anything stupid.

Moderately complex stuff - let it code away, review/test it in my IDE and make any changes myself and tell claude what I've changed (and get it to do a quick review of my code)

Complex stuff - watch it like a hawk as it is thinking and interrupt it constantly asking questions/telling it what to do, then review in my IDE.

I hope no one works for them again.

Usually in 2-3 prompts I can get a python or shell script that reads some file list somewhere, reads some json/csv elsewhere. Combines it in various ways and spits out some output to be ingested by some other pipeline.

I just test this code if it works it’s good.

Never in my life would I put this in a critical system though. When I review these files they are full of tiny errors that would blow up in spectacular manner if the input was slightly off somewhere.

It’s good for what it is. But I’m honestly afraid of production code being vibe coded by these tools.

Nothing to do with regulators.

What happened?

I commented on the OG thread something like "weird since MSFT owns VS Code" and got downvoted to oblivion.

Yet here we are, always right :).

And it was a crazy deal to begin with, for reference JetBrains who's building IDEs for 24 years are evaluated at $7 billions

Not sure how the VCs get their cut. I'm guessing that Google can balance it out by participating in rounds for other startups in that VC's porfolio.

the only reason he'd walk away is because he thinks other opportunities are higher EV. if he believes this, a) the investors investment is likely worth virtually 0 anyway and b) if it's not, removing a leader who doesn't want to be there probably increases P(success) for the company and further increases the value of the investment.

founder departure isn't good for the narrative, but it's a symptom of an investment going bad, not often a cause.

i like cursor fine, but check out the forum/subreddit to see people talking like addicts, pissed their fix is getting more expensive

i think this aggressive reaction is more pronounced for non-programmers who are making things for the first time. they tasted a new power and they don't want it taken away.

You sweet summer child.

You must be new around here.

It's interesting when I see videos or reddit posts about cursor and people getting rate limited and being super angry. In my experience tab is the number one feature, and I feel like most people using agent are probably overusing it tasks that would honestly take less time to do myself or using models way smarter than they need to be for the task at hand.

- Anthropic doesn't use the inputs for training.

- Cursor doesn't have $900M ARR. That was the raise. Their ARR is ~$500m [1].

- Claude Code already support the niceties, including "add selection to chat", accessing IDE's realtime warnings and errors (built-in tool 'ideDiagnostics'), and using IDE's native diff viewer for reviewing the edits.

[1] https://techcrunch.com/2025/06/05/cursors-anysphere-nabs-9-9...

The basic concept is out there.

Lots of smart people studying hard to catch up to also be poached. No shortage of those I assume.

Good trainingsdata still seems the most important to me.

(and lots of hardware)

Or does the specific training still involves lots of smart decisions all the time?

And those small or big decisions make all the difference?

And so I’d say this isn’t a harbinger of the death of Cursor, instead proof that there’s a future in the market they were just recently winning.

Uh, the irony is that this is exactly what Windsurf tried.

I get all AI or none, so it’s always obvious what’s happening.

Completions are OK, but I did not enjoy the feeling of both us having a hand on the wheel and trying to type at the same time.

This week I have been using Claude Code and Windsurf side by side. I would make change with one, stash it, ask the other for similar change and then would diff it.

Overall Windsurf was pretty on a par with Claude code.

I love CC, but letting it auto-write changes is, at best, a waste of time trying to find the bugs after they start compounding.

Coding startups also try to fine-tune OSS models to their own ends. But this is also very difficult, and usually just done as a cost optimization, not as a way to get better functionality.

During the evaluation at a previous job, we found that windsurf is waaaay better than anything else. They were expensive (to train on our source code directly) but the solution the offered was outperforming others.

2. Cost to train is also prohibitive. Grok data centre has 200,000 H100 Graphics cards. Impossible for a startup to compete with this.

https://news.ycombinator.com/item?id=44538243

https://blog.google/technology/developers/introducing-gemini...

The reason they are talking about building new nuclear power plants in the US isn't just for a few training runs, its for inference. At scale the AI tools are going to be extremely expensive.

Also note China produces twice as much electricity as the United States. Software development and agent demand is going to be competitive across industries. You may think, oh I can just use a few hours of this a day and I got a week of work done (happens to me some days), but you are going to end up needing to match what your competitors are doing - not what you got comfortable with. This is the recurring trap of new technology (no capitalism required.)

There is a danger to independent developers becoming reliant on models. $100-$200 is a customer acquisition cost giveaway. The state of the art models probably will end up costing hourly what a human developer costs. There is also the speed and batching part. How willing is the developer to, for example, get 50% off but maybe wait twice as long for the output. Hopefully the good dev models end up only costing $1000-$2000 a month in a year. At least that will be more accessible.

Somewhere in the future these good models will run on device and just cost the price of your hardware. Will it be the AGI models? We will find out.

I wonder how this comment will age, will look back at it in 5 or 10 years.

We’d probably see more companies training their own models if it was cheaper, for sure. Maybe some of them would do very well. But even having a lot of money to throw at this doesn’t guarantee success, e.g. Meta’s Llama 4 was a big disappointment.

That said, it’s not impossible to catch up to close to state-of-the-art, as Deepseek showed.

Estimating productivity gains is a flame war I don’t want to start, but as a signal: if the CC Max plan goes up 10x in price, I’m still keeping my subscription.

I maintain top-tier subscription to every frontier service (~$1k/mo) and throughout the week spend multiple hours with each of Cursor, Amp, Augment, Windsurf, Codex CLI, Gemini CLI, but keep on defaulting to Claude Code.

loool dead

Cursor's Accept / Reject feature for each change it makes in each file is nice whereas I have to use a diff tool to review the changes in Claude Code.

Also, if I go down a prompt alley that's a dead end, Cursor has the Restore Checkpoint feature to get back to the original prompt and try a different path. With Claude Code, you had better have committed the code to git, otherwise you end up with a mess you didn't want.

My company pays for both, but I mostly use Cursor unless I know I am doing a new project or some proof of concept, which Claude Code might have an edge on with a more mature TODO list feature.

They raised A, B, and C round (according to CrunchBase), and then the founders just walk away and get a job/deal at Google?

The same set of rules that apply to you and me are not universal.

Are you doing front end backend full stack or model development itself?

Are you destilling models for training your own?

I have never heard someone using so much subscription?

Is this for your full time job or startup?

Why not use qwen or deep seek and host it yourself?

I am impressed with what you are doing.

There are some alternatives like continue.dev or Jetbrains own AI offering but no Cursor or Claude Code ( Sonnet 3.7/4) you can get through Jetbrains plugin or others, but Anthropic does not provide support same with cursor.

Windsurf’s value didn’t go to $0 overnight. The company will continue and their equity is likely still worth a decent amount wherever the company ends up.

Obviously a disappointing outcome for the people who thought life changing money was right around the corner, but they didn’t lose everything.

It is hard to say no when Google/Meta gives you say $100M upfront and hundreds more if not Billion+ in RSUs. After 3 rounds it is not unreasonable to have only 5-10%.

10% of a company worth a few billion burning a lot of cash, that needs to keep raising more rounds i.e more dilution, may have less value than RSUs from multi-trillion dollar publicly traded liquid tech company today.

It is also quite hard to raise $5-10+Billion in cash. There are only handful of startups which have ever done so

Very few funds/investors can afford to do so large rounds. This was SoftBank's thesis for most of last decade, compete by just outfunding competing products in a market.

My app builds and runs fine on Termux, so my CLAUDE.md says to always run unit tests after making changes. So I punch in a request, close my phone for a bit, then check back later and review the diff. Usually takes one or two follow-up asks to get right, but since it always builds and passes tests, I never get complete garbage back.

There are some tasks that I never give it. Most of that is just intuition. Anything I need to understand deeply or care about the implementation of I do myself. And the app was originally hand-built by me, which I think is important - I would not trust CC to design the entire thing from scratch. It's much easier to review changes when you understand the overall architecture deeply.

That said, the creator of Claude Code jumped to Cursor so they must see a there there.

Prompt: https://gist.github.com/transitive-bullshit/487c9cb52c75a970...

Say no more.

I strongly disagree. It will put the wrong doc snippets into context 99% of the time. If the docs are slightly long then forget it, it’ll be even worse.

I never use it because of this.

> The progressive spin would be to now ban acquihires somehow, and then whatever new legal invention will be created next.

Progressive has become a moving target, but the pro-competition view would be to break up the massively concentrated companies that are further consolidating markets. Thats what the Khan FTC was trying to do, but we need a Congress interested in a competitive marketplace, which we haven’t had in a while.

The thesis is that once you’re paying $200 a month, you’re beholden and won’t pay and compare it with anything else.

Imagine backing this startup and the founder team takes a parachute...

Dude, I saw a lot crazier things happen on a monthly basis. And don't even get me started on the personal lives and partying that the show didn't display.

Look no further than founders in the sports betting space, like the fanduel founders. Borrow a bunch of money at huge valuations because of hype and ignore the fact, that despite it being exciting and popular, the margins are like <5%. Fanduel founders sold for 400 something million, walked away with nothing. Its now a multibillion dollar company when the new owners realized the product was marketing, not the vig. These AI companies are shifting towards their "marketing" eras.

Zed tab is a lot worse in comparison (partly because it’s slow)

They’re just not enforceable against “rank and file” employees.

Windsurf phone's home on every code edit that you have and takes on 30% load on your servers or on your workstation depending on what you're running.

I would strongly discourage the use of windsurf on your systems.

Case in point their AI model that they just built.

At least in the Scale case there seemed to be some form of payout to employees and equity holders, but this takes it a whole lot further by just throwing out all other employees.

There is supposed to be the concept that “all common stock is the same”. These fake-acquisitions completely undermine that.

My local ollama + continue + Qwen 2.5 coder gives good tab completion with minimal latency; how much better is Cursor’s tab completion model?

I’m still weary of letting LLM edit my code so my local setup gives me sufficient assistance with tab completion and occasional chat.

The issue isn’t an acquisition not working out, it’s that the founding/exec team felt it appropriate to arrange their own exits and abandon their team before even communicating that their “successful exit” wasn’t actually happening.

Why not an acquisition?

How did Google get Windsurf and investors to agree to this maneuver that decapitated the leadership and key talent, without a big exit event for everyone?

My read of the article: "Here's x% of what OpenAI offered you, you waive legal challenges while we cherry-pick your people and license the tech in their heads, and you can keep the company, and everyone left behind can promote themselves to fill the vacancies."

Since they announced that you can use the Pro subscription with Claude Code, I've been using it much more and I've never ever been rate limited.

If the people instead just quit their jobs and start working at Google … nothing to see here.

Does anyone have a comparison between this and OpenAI Codex? I find OpenAI's thing really good actually (vastly better workflow that Windsurf). Maybe I am missing out however.

Thanks for the share !

"Agentic" workflows burn through tokens like there's no tomorrow, and the new Opus model is so expensive per-token that the Max plan pays itself back in one or two days of moderate usage. When people reports their Claude Code sessions costing $100+ per day, I read that as the API price equivalent - it makes no sense to actually "pay as you go" with Claude right now.

This is arguably the cheapest option available on the market right now in terms of results per dollar, but only if you can afford the subscription itself. There's also time/value component here: on Max x5, it's quite easy to hit the usage limits of Opus (fortunately the limit is per 5 hours or so); Max x20 is only twice the price of Max x5 but gives you 4x more Opus; better model = less time spent fighting with and cleaning up after the AI. It's expensive to be poor, unfortunately.

I don’t see how that can be true, but if it is…

Either you, or I are definitely use Claude Code incorrectly.

It’s so stupid fast to get running that you aren’t out anything if you don’t like it.

There was no way I was going to switch to a different IDE.

I can do most of what I want with cline, and I've gone back from large changes to just small changes and been moving much quicker. Large refactors/changes start to deviate from what you actually want to accomplish unless you have written a dissertation, and even then they fail.

As to “why”: I’ve been coding for 25 years, and LLMs is the first technology that has a non-linear impact on my output. It’s simultaneously moronic and jaw-dropping. I’m good at what I do (eg, merged fixes into Node) and Claude/o3 regularly finds material edge cases in my code that I was confident in. Then they add a test case (as per our style), write a fix, and update docs/examples within two minutes.

I love coding and the art&craft of software development. I’ve written millions of lines of revenue generating code, and made millions doing it. If someone forced me to stop using LLMs in my production process, I’d quit on the spot.

Why not self host: open source models are a generation behind SOTA. R1 is just not in the same league as the pro commercial models.

  marketing > market > product

It’s the difference between running a marathon (impressive) and winning a marathon (here’s a giant sponsorship check).